Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees to C2, 14141-14144 [2013-04857]

Download as PDF Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices sroberts on DSK5SPTVN1PROD with NOTICES (LOCA) methodology that requires revising TS 5.6.5.b to include a reference to the modified LOCA methodology. Also, the amendments revise TSs 3.3.1.1, 5.6.5.a, and 5.6.5.b to include the modified LOCA methodology and the oscilliation power range monitor upscale function period based detection algorithm setpoint limits. Date of issuance: February 15, 2013. Effective date: The amendments are effective as of this date of issuance. For Unit 2, the amendment shall be implemented prior to entering Mode 3 (i.e., Hot Shutdown) from the spring 2013 refueling outage. For Unit 3, changes to TSs 5.6.5 and 3.3.1 shall be implemented within 60 days of issuance. The remaining changes shall be implemented prior to entering Mode 3 from the spring 2014 refueling outage. Amendment Nos.: Unit 1—309 and Unit 2—268. Renewed Facility Operating License Nos. DPR–52 and DPR–68: Amendments revised the licenses and TSs. Date of initial notice in Federal Register: The original application dated February 25, 2011, was noticed on May 3, 2011 (76 FR 24930). The supplement dated July 30, 2012, was noticed on November 5, 2012 (77 FR 66490). The supplement dated January 24, 2013, provided additional information that clarified the licensee’s July 30, 2012, submittal, did not expand the scope of the application as noticed and did not change the NRC staff’s proposed no significant hazards consideration determination as published in the FR on November 5, 2012 (77 FR 66490). The Commission’s related evaluation of the amendment is contained in a Safety Evaluation dated February 15, 2013. No significant hazards consideration comments received: No. Virginia Electric and Power Company, Docket No. 50–339, North Anna Power Station, Unit No. 2, Louisa County, Virginia Date of application for amendment: May 11, 2012. Brief Description of amendment: The amendment would revise the Technical Specification (TS) 3.1.7, ‘‘Rod Position Indication’’ to allow two demand position indicators in one or more banks to be inoperable for up to 4 hours. This change is proposed as a temporary change to the TS for the current operating cycle and is proposed as a footnote to the current TS Limiting Condition for Operation (LCO) Section 3.1.7, Condition D. Date of issuance: February 14, 2013. VerDate Mar<15>2010 16:15 Mar 01, 2013 Jkt 229001 14141 Effective date: As of the date of issuance and shall be implemented within the end of operating Cycle 22. Amendment No.: 251. Renewed Facility Operating License No. NPF–7: Amendment changes the license and the TS. Date of initial notice in Federal Register: June 12, 2012 (77 FR 35077). The Commission’s related evaluation of the amendment is contained in a Safety Evaluation dated February 14, 2013. No significant hazards consideration comments received: No. FOR FURTHER INFORMATION CONTACT: Dated at Rockville, Maryland, this 25th day of February 2013. For the Nuclear Regulatory Commission. Louise Lund, Deputy Director, Division of Operating Reactor Licensing, Office of Nuclear Reactor Regulation. Sunshine Act Meetings [FR Doc. 2013–04885 Filed 3–1–13; 8:45 am] BILLING CODE 7590–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68992] Public Availability of the Securities and Exchange Commission’s FY 2012 Service Contract Inventory U.S. Securities and Exchange Commission. ACTION: Notice. AGENCY: In accordance with Section 743 of Division C of the Consolidated Appropriations Act of 2010 (Pub. L. 111–117), SEC is publishing this notice to advise the public of the availability of the FY2012 Service Contract Inventory (SCI) and the FY2011 SCI Analysis. The SCI provides information on FY2012 actions over $25,000 for service contracts. The inventory organizes the information by function to show how SEC distributes contracted resources throughout the agency. SEC developed the inventory per the guidance issued on November 5, 2011 by the Office of Management and Budget’s Office of Federal Procurement Policy (OFPP). OFPP’s guidance is available at http://www.whitehouse.gov/ sites/default/files/omb/procurement/ memo/service-contract-inventoriesguidance-11052010.pdf. The Service Contract Inventory Analysis for FY2011 provides information based on the FY2011 Inventory. The SEC has posted its inventory, a summary of the inventory and the FY2011 analysis on the SEC’s homepage at http:// www.sec.gov/about/secreports.shtml or http://www.sec.gov/open. SUMMARY: PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 Direct questions regarding the service contract inventory to Vance Cathell, Director, Office of Acquistions, 202.551.8385 or CathellV@sec.gov. Dated: February 27, 2013. Elizabeth M. Murphy, Secretary. [FR Doc. 2013–04917 Filed 3–1–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Notice is hereby given, pursuant to the provisions of the Government in the Sunshine Act, Public Law 94–409, that the Securities and Exchange Commission will hold an Open Meeting on Wednesday, March 6, 2013 at 10:00 a.m., in the Auditorium, Room L–002. The subject matter of the Open Meeting will be: The Commission will consider whether to propose Regulation Systems Compliance and Integrity (Regulation SCI) under the Securities Exchange Act of 1934 (‘‘Exchange Act’’) and conforming amendments to Regulation ATS under the Exchange Act. At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551–5400. Dated: February 27, 2013. Elizabeth M. Murphy, Secretary. [FR Doc. 2013–04987 Filed 2–28–13; 11:15 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68977; File No. SR–BX– 2013–017] Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to Routing Fees to C2 February 25, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 1 15 2 17 E:\FR\FM\04MRN1.SGM U.S.C. 78s(b)(1). CFR 240.19b–4. 04MRN1 14142 Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices 21, 2013, NASDAQ OMX BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend fees for routing options to away markets in Chapter XV, entitled ‘‘Options Pricing,’’ at Section 2. The text of the proposed rule change is available on the Exchange’s Web site at http:// nasdaqomxbx.cchwallstreet.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change sroberts on DSK5SPTVN1PROD with NOTICES 1. Purpose The Exchange proposes to amend its Routing Fees at Chapter XV, Section 2(4) of the Exchange Rules in order to recoup costs applicable to the C2 Options Exchange, Inc. (‘‘C2’’) that the Exchange incurs for routing and executing orders in equity options. Today, the Exchange calculates Routing Fees by assessing certain Exchange costs related to routing orders to away markets plus the away market’s transaction fee. The Exchange assesses a $0.05 per contract fixed Routing Fee when routing orders to the NASDAQ OMX PHLX LLC (‘‘PHLX’’) and the NASDAQ Stock Market LLC (‘‘NOM’’) and a $0.11 per contract fixed Routing Fee to all other options exchanges in VerDate Mar<15>2010 16:15 Mar 01, 2013 Jkt 229001 addition to the actual transaction fee or rebate paid by the away market.3 The fixed Routing Fee is based on costs that are incurred by the Exchange when routing to an away market in addition to the away market’s transaction fee. For example, the Exchange incurs a fee when it utilizes Nasdaq Options Services LLC (‘‘NOS’’), a member of the Exchange and the Exchange’s exclusive order router.4 Each time NOS routes to away markets NOS incurs a clearing-related cost 5 and, in the case of certain exchanges, a transaction fee is also charged in certain symbols, which fees are passed through to the Exchange. The Exchange also incurs administrative and technical costs associated with operating NOS, membership fees at away markets, Options Regulatory Fees (‘‘ORFs’’) and technical costs associated with routing options. C2 recently filed a ruled change to amend its transaction fees and rebates for simple,6 non-complex orders, in equity options classes which became operative on February 1, 2013.7 C2 assesses its transaction fees based on a formula wherein fees are calculated on a per-contract basis.8 C2 pays rebates based on a formula wherein rebates are calculated on a per-contract basis.9 3 Today, the transaction fee assessed by the Exchange is based on the away market’s actual transaction fee or rebate for a particular market participant at the time that the order was entered into the Exchange’s trading system. This transaction fee is calculated on an order-by-order basis, since different away markets charge different amounts. In the event that there is no transaction fee or rebate assessed by the away market, the only fee assessed is the fixed Routing Fee. With respect to the rebate, the Exchange pays a market participant the rebate offered by an away market where there is such a rebate. Any rebate available is netted against a fee assessed by the Exchange. The Exchange is not proposing to amend its calculation of the away market’s transaction fee as described herein. 4 See BX Rules at Chapter VI, Section 11(e) (Order Routing). 5 The Options Clearing Corporation (‘‘OCC’’) assesses a clearing fee of $0.01 per contract side. See Securities Exchange Act Release No. 68025 (October 10, 2012), 77 FR 63398 (October 16, 2012) (SR–OCC–2012–18). 6 C2 defines simple orders to exclude ETFs and indexes. 7 See Securities Exchange Act Release No. 68792 (January 31, 2013), 78 FR 8621 (February 6, 2013) (SR–C2–2013–004). 8 C2 utilizes the following formula to calculate its transaction fees: C2 BBO Market Width at time of execution) × (Market Participant Rate) × 50. The C2 BBO Market Width is the difference between the quoted best offer and best bid in each class on C2 (the displayed C2 ask price minus the displayed C2 bid price). The Market Participant Rates are different rates for different types of market participants, as follows: Market Participant Rate; C2 Market-Maker 30%; Public Customer (Maker) 40%; all other origins 50%. See C2’s Fees Schedule. 9 C2 utilizes the following formula to compute rebates for simple, non-complex Public Customer orders in all equity options classes that remove PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 Because of this recent rule change, the Exchange proposes to amend C2 Routing Fees to provide transparency to its market participants. The Exchange proposes to amend its non-Customer C2 Routing Fees to assess the fixed cost of $0.11 per contract plus a flat rate of $0.85 per contract, except with respect to Customers.10 With respect to Customers, the Exchange proposes not to pass the rebate offered by C2, as is the case today for Routing to C2 and other away markets. The Exchange proposes to not assess Customers a Routing Fee when routing orders to C2. This is similar to the manner in which the BATS Exchange, Inc. (‘‘BATS’’) prices Customer orders routed to C2.11 The Exchange proposes to specifically note the amended rates in its rule text in order to simplify C2 Routing Fees. As with all fees, the Exchange may adjust these Routing Fees in response to competitive conditions by filing a new proposed rule change. 2. Statutory Basis BX believes that its proposal to amend its pricing is consistent with Section 6(b) of the Act12 in general, and furthers the objectives of Section 6(b)(4) of the Act,13 in particular, in that it is an equitable allocation of reasonable fees and other charges among its Participants. The Exchange believes that its proposal to amend non-Customer C2 Routing Fees from actual transaction charges to a flat rate, in addition to its fixed cost, is reasonable because the current C2 Routing Fees are not transparent. The Exchange believes that assessing a flat rate in addition to the fixed cost assessed by the Exchange will provide market participants certainty with respect to C2 Routing Fees. Further, each destination market’s transaction charge varies and there is a cost incurred by the Exchange when routing orders to away markets. The costs to the Exchange include clearing costs, administrative and technical costs associated with operating NOS, membership fees at away markets, ORFs liquidity (i.e. takers): Rebate = (C2 BBO Market Width at time of execution) × (Order Size Multiplier) × 50. The order size multiplier is as follows: 1–10 contracts will be 36%; 11–99 contracts will be 30%; 100–250 contracts will be 20% and 251 plus contracts is 0%. The maximum rebate is capped at $0.75 per contract. See C2’s Fees Schedule. 10 Recent pricing changes by C2 will result in a maximum fee of $0.85 per contract for nonCustomer orders executed at C2 and rebates or free executions for Customer orders executed at C2. 11 See SR–BATS–2013–012 (not yet published). 12 15 U.S.C. 78f(b). 13 15 U.S.C. 78f(b)(4). E:\FR\FM\04MRN1.SGM 04MRN1 sroberts on DSK5SPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices and technical costs associated with routing options. The Exchange believes that the proposed non-Customer C2 Routing Fees will enable the Exchange to recover the costs it incurs to route orders to C2 in addition to the flat fee to recoup transaction costs. The Exchange believes that its proposal to amend the non-Customer C2 Routing Fees from actual transaction charges to a flat rate, in addition to its fixed cost, is equitable and not unfairly discriminatory because the Exchange would uniformly assess the same C2 Routing Fees to all non-Customer market participants. Under its flat fee structure, taking all costs to the Exchange into account, the Exchange may operate at a slight gain or a slight loss for orders routed to and executed at C2. The Exchange believes that its proposed Routing Fees for routing nonCustomer orders to C2 are reasonable because they are an approximation of the maximum fees the Exchange will be charged for such executions, including costs. As a general matter, the Exchange believes that the proposed fees will allow it to recoup and cover its costs of providing routing services to C2. The Exchange believes that its proposal to not pay a rebate to Customers and assess no Customer Routing Fee is reasonable, equitable and not unfairly discriminatory. The Exchange believes that the pricing structure is reasonable because, although not an approximation of the cost of routing to C2, Customer orders will still receive executions free of charge, whereas all other non-Customer routed orders routed to C2 would be assessed a Routing Fee. The Exchange believes that the proposed pricing for Customer orders is equitable and not unfairly discriminatory because it would apply uniformly to all Customer transactions. Participants desiring the rebate offered by C2 can route orders directly in order to take advantage of the rebate. Market participants may submit orders to the Exchange as ineligible for routing or ‘‘DNR’’ to avoid Routing Fees. Further, the Exchange believes that it is equitable and not unfairly discriminatory to assess a fixed cost of $0.05 per contract to route orders to NASDAQ OMX away markets (BX Options and NOM) because the cost, in terms of actual cash outlays, to the Exchange to route to those markets is lower. For example, costs related to routing to BX Options and NOM are lower as compared to other away markets because NOS is utilized by all three exchanges to route orders.14 NOS 14 See Chapter VI, Section 11 of the NASDAQ and BX Options Rules and Phlx Rule 1080(m)(iii)(A). VerDate Mar<15>2010 16:15 Mar 01, 2013 Jkt 229001 and the three NASDAQ OMX options markets have a common data center and staff that are responsible for the day-today operations of NOS. Because the three exchanges are in a common data center, Routing Fees are reduced because costly expenses related to, for example, telecommunication lines to obtain connectivity are avoided when routing orders in this instance. The costs related to connectivity to route orders to other NASDAQ OMX exchanges are de minimis. When routing orders to non-NASDAQ OMX exchanges, the Exchange incurs costly connectivity charges related to telecommunication lines and other related costs when routing orders. The Exchange believes it is reasonable, equitable and not unfairly discriminatory to pass along savings realized by leveraging NASDAQ OMX’s infrastructure and scale to market participants when those orders are routed to BX Options and NOM. It is important to note with respect to routing to an away market that orders are routed based on price first.15 The Exchange will route orders to away markets where the Exchange’s disseminated bid or offer is inferior to the national best bid (best offer) (‘‘NBBO’’) price.16 B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the rule change would allow the Exchange to recoup its costs when routing orders designated as available for routing by the market participant to C2. Participants may choose to mark the order as ineligible for routing to avoid incurring these fees.17 Today, other options exchanges also assess similar fees to recoup costs incurred by the Exchange to route orders to away markets. The Exchange routes orders to away markets where the Exchange’s disseminated bid or offer is inferior to the national best bid (best offer) (‘‘NBBO’’) price and based on price first.18 The Exchange operates in a highly competitive market, comprised of eleven exchanges, in which market participants can easily and readily direct order flow to competing venues if they deem fee levels at a particular 15 See BX Rules at Chapter XII (Options Order Protection and Locked and Crossed Market Rules). 16 See BX Rules at Chapter VI, Section 11(e) (Order Routing). 17 Id. 18 See supra note 15. PO 00000 Frm 00073 Fmt 4703 Sfmt 4703 14143 venue to be excessive. Accordingly, the fees that are assessed by the Exchange must remain competitive with fees charged by other venues and therefore must continue to be reasonable and equitably allocated to those Participants that opt to direct orders to the Exchange rather than competing venues. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.19 At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rulecomments@sec.gov. Please include File Number No. SR–BX–2013–017 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number No. SR–BX–2013–017. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will 19 15 E:\FR\FM\04MRN1.SGM U.S.C. 78s(b)(3)(A)(ii). 04MRN1 14144 Federal Register / Vol. 78, No. 42 / Monday, March 4, 2013 / Notices post all comments on the Commission’s Internet Web site (http://www.sec.gov/ rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of BX. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number No. No. SR– BX–2013–017, and should be submitted on or before March 25, 2013. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2013–04857 Filed 3–1–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68987; File No. SR–MSRB– 2013–02] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change Relating to Amendments to MSRB Rule G–39, on Telemarketing sroberts on DSK5SPTVN1PROD with NOTICES February 26, 2013. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 notice is hereby given that on February 11, 2013, the Municipal Securities Rulemaking Board (‘‘MSRB’’) filed with the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the MSRB. The Commission is publishing 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Mar<15>2010 16:15 Mar 01, 2013 Jkt 229001 this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The MSRB is filing with the Commission proposed amendments to MSRB Rule G–39, on telemarketing. The proposed rule change would adopt provisions that are substantially similar to the telemarketing rules of the Federal Trade Commission (‘‘FTC’’). The text of the proposed rule change is available on the MSRB’s Web site at www.msrb.org/Rules-andInterpretations/SEC-Filings/2013Filings.aspx, at the MSRB’s principal office, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Summary of Proposed Rule Change. The MSRB proposes to amend Rule G– 39, on telemarketing, to add provisions that are substantially similar to FTC rules that prohibit deceptive and other abusive telemarketing acts or practices.3 Rule G–39 currently requires brokers, dealers, and municipal securities dealers (‘‘dealers’’) to, among other things, maintain do-not-call lists and limit the hours of telephone solicitations. In 1996, the SEC directed the MSRB to enact a telemarketing rule in accordance with the Prevention Act.4 The Prevention Act requires the 3 The FTC initially adopted its rules prohibiting deceptive and other abusive telemarketing acts or practices (the ‘‘Telemarketing Sales Rule,’’ codified at 16 CFR 310.1–9) in 1995 under the Telemarketing and Consumer Fraud and Abuse Prevention Act (‘‘Prevention Act’’) codified at 15 U.S.C. 6101–6108. See FTC, Telemarketing Sales Rule, 60 FR 43842 (Aug. 23, 1995). The Telemarketing Sales Rule has been amended since 1995, prompting the SEC’s request for the MSRB to review its telemarketing rule. See amendments cited infra note 7. 4 See Prevention Act supra note 3. PO 00000 Frm 00074 Fmt 4703 Sfmt 4703 Commission to promulgate, or direct any national securities exchange or registered securities association to promulgate, rules substantially similar to the FTC rules to prohibit deceptive and other abusive telemarketing acts or practices, unless the Commission determines either that the rules are not necessary or appropriate for the protection of investors or the maintenance of fair and orderly markets, or that existing federal securities laws or Commission rules already provide for such protection.5 In 1997, the SEC determined that telemarketing rules promulgated and expected to be promulgated by selfregulatory organizations, together with the other rules of the self-regulatory organizations, the federal securities laws, and the SEC’s rules thereunder, satisfied the requirements of the Prevention Act because, at the time, the applicable provisions of those laws and rules were substantially similar to the Telemarketing Sales Rule.6 Since 1997, the FTC has amended its telemarketing rules in light of changing telemarketing practices and technology.7 In May 2011, Commission staff directed the MSRB to conduct a review of its telemarketing rule and propose rule amendments that provide protections that are at least as strong as those provided by the FTC’s telemarketing rules.8 Commission staff had concerns ‘‘that the [self-regulatory organization] rules overall have not kept pace with the FTC’s rules, and thus may no longer meet the standards of the Prevention Act.’’ 9 The proposed rule amendments, as directed by the Commission staff, would amend and adopt provisions in Rule G– 5 See 15 U.S.C. 6102. Telemarketing and Consumer Fraud and Abuse Prevention Act; Determination that No Additional Rulemaking Required, Securities Exchange Act Release No. 38480 (Apr. 7, 1997), 62 FR 18666 (Apr. 16, 1997). The Commission also determined that some provisions of the FTC’s telemarketing rules related to areas already extensively regulated by existing securities laws or activities not applicable to securities transactions. Id. at 62 FR 18667–69. 7 See, e.g., FTC, Telemarketing Sales Rule, 73 FR 51164 (Aug. 29, 2008) (amendments to the Telemarketing Sales Rule relating to prerecorded messages and call abandonments); and FTC, Telemarketing Sales Rule, 68 FR 4580 (Jan. 29, 2003) (amendments to the Telemarketing Sales Rule establishing requirements for, among other things, sellers and telemarketers to participate in the national do-not-call registry). 8 See Letter from Robert W. Cook, Director, Division of Trading and Markets, SEC, to Michael G. Bartolotta, then Chairman of the Board of Directors of the MSRB, dated May 10, 2011 (the ‘‘Cook Letter’’). SEC staff also asked the MSRB to coordinate with the Financial Industry Regulatory Authority (‘‘FINRA’’) regarding proposed telemarketing rule amendments. 9 Id. 6 See E:\FR\FM\04MRN1.SGM 04MRN1

Agencies

[Federal Register Volume 78, Number 42 (Monday, March 4, 2013)]
[Notices]
[Pages 14141-14144]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04857]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68977; File No. SR-BX-2013-017]


Self-Regulatory Organizations; NASDAQ OMX BX, Inc.; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Relating to 
Routing Fees to C2

February 25, 2013.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on February

[[Page 14142]]

21, 2013, NASDAQ OMX BX, Inc. (``BX'' or ``Exchange'') filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by the Exchange. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend fees for routing options to away 
markets in Chapter XV, entitled ``Options Pricing,'' at Section 2.
    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqomxbx.cchwallstreet.com, at the principal 
office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its Routing Fees at Chapter XV, 
Section 2(4) of the Exchange Rules in order to recoup costs applicable 
to the C2 Options Exchange, Inc. (``C2'') that the Exchange incurs for 
routing and executing orders in equity options. Today, the Exchange 
calculates Routing Fees by assessing certain Exchange costs related to 
routing orders to away markets plus the away market's transaction fee. 
The Exchange assesses a $0.05 per contract fixed Routing Fee when 
routing orders to the NASDAQ OMX PHLX LLC (``PHLX'') and the NASDAQ 
Stock Market LLC (``NOM'') and a $0.11 per contract fixed Routing Fee 
to all other options exchanges in addition to the actual transaction 
fee or rebate paid by the away market.\3\
---------------------------------------------------------------------------

    \3\ Today, the transaction fee assessed by the Exchange is based 
on the away market's actual transaction fee or rebate for a 
particular market participant at the time that the order was entered 
into the Exchange's trading system. This transaction fee is 
calculated on an order-by-order basis, since different away markets 
charge different amounts. In the event that there is no transaction 
fee or rebate assessed by the away market, the only fee assessed is 
the fixed Routing Fee. With respect to the rebate, the Exchange pays 
a market participant the rebate offered by an away market where 
there is such a rebate. Any rebate available is netted against a fee 
assessed by the Exchange. The Exchange is not proposing to amend its 
calculation of the away market's transaction fee as described 
herein.
---------------------------------------------------------------------------

    The fixed Routing Fee is based on costs that are incurred by the 
Exchange when routing to an away market in addition to the away 
market's transaction fee. For example, the Exchange incurs a fee when 
it utilizes Nasdaq Options Services LLC (``NOS''), a member of the 
Exchange and the Exchange's exclusive order router.\4\ Each time NOS 
routes to away markets NOS incurs a clearing-related cost \5\ and, in 
the case of certain exchanges, a transaction fee is also charged in 
certain symbols, which fees are passed through to the Exchange. The 
Exchange also incurs administrative and technical costs associated with 
operating NOS, membership fees at away markets, Options Regulatory Fees 
(``ORFs'') and technical costs associated with routing options.
---------------------------------------------------------------------------

    \4\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
    \5\ The Options Clearing Corporation (``OCC'') assesses a 
clearing fee of $0.01 per contract side. See Securities Exchange Act 
Release No. 68025 (October 10, 2012), 77 FR 63398 (October 16, 2012) 
(SR-OCC-2012-18).
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    C2 recently filed a ruled change to amend its transaction fees and 
rebates for simple,\6\ non-complex orders, in equity options classes 
which became operative on February 1, 2013.\7\ C2 assesses its 
transaction fees based on a formula wherein fees are calculated on a 
per-contract basis.\8\ C2 pays rebates based on a formula wherein 
rebates are calculated on a per-contract basis.\9\ Because of this 
recent rule change, the Exchange proposes to amend C2 Routing Fees to 
provide transparency to its market participants.
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    \6\ C2 defines simple orders to exclude ETFs and indexes.
    \7\ See Securities Exchange Act Release No. 68792 (January 31, 
2013), 78 FR 8621 (February 6, 2013) (SR-C2-2013-004).
    \8\ C2 utilizes the following formula to calculate its 
transaction fees: C2 BBO Market Width at time of execution) x 
(Market Participant Rate) x 50. The C2 BBO Market Width is the 
difference between the quoted best offer and best bid in each class 
on C2 (the displayed C2 ask price minus the displayed C2 bid price). 
The Market Participant Rates are different rates for different types 
of market participants, as follows: Market Participant Rate; C2 
Market-Maker 30%; Public Customer (Maker) 40%; all other origins 
50%. See C2's Fees Schedule.
    \9\ C2 utilizes the following formula to compute rebates for 
simple, non-complex Public Customer orders in all equity options 
classes that remove liquidity (i.e. takers): Rebate = (C2 BBO Market 
Width at time of execution) x (Order Size Multiplier) x 50. The 
order size multiplier is as follows: 1-10 contracts will be 36%; 11-
99 contracts will be 30%; 100-250 contracts will be 20% and 251 plus 
contracts is 0%. The maximum rebate is capped at $0.75 per contract. 
See C2's Fees Schedule.
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    The Exchange proposes to amend its non-Customer C2 Routing Fees to 
assess the fixed cost of $0.11 per contract plus a flat rate of $0.85 
per contract, except with respect to Customers.\10\ With respect to 
Customers, the Exchange proposes not to pass the rebate offered by C2, 
as is the case today for Routing to C2 and other away markets. The 
Exchange proposes to not assess Customers a Routing Fee when routing 
orders to C2. This is similar to the manner in which the BATS Exchange, 
Inc. (``BATS'') prices Customer orders routed to C2.\11\ The Exchange 
proposes to specifically note the amended rates in its rule text in 
order to simplify C2 Routing Fees.
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    \10\ Recent pricing changes by C2 will result in a maximum fee 
of $0.85 per contract for non-Customer orders executed at C2 and 
rebates or free executions for Customer orders executed at C2.
    \11\ See SR-BATS-2013-012 (not yet published).
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    As with all fees, the Exchange may adjust these Routing Fees in 
response to competitive conditions by filing a new proposed rule 
change.
2. Statutory Basis
    BX believes that its proposal to amend its pricing is consistent 
with Section 6(b) of the Act\12\ in general, and furthers the 
objectives of Section 6(b)(4) of the Act,\13\ in particular, in that it 
is an equitable allocation of reasonable fees and other charges among 
its Participants.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that its proposal to amend non-Customer C2 
Routing Fees from actual transaction charges to a flat rate, in 
addition to its fixed cost, is reasonable because the current C2 
Routing Fees are not transparent. The Exchange believes that assessing 
a flat rate in addition to the fixed cost assessed by the Exchange will 
provide market participants certainty with respect to C2 Routing Fees. 
Further, each destination market's transaction charge varies and there 
is a cost incurred by the Exchange when routing orders to away markets. 
The costs to the Exchange include clearing costs, administrative and 
technical costs associated with operating NOS, membership fees at away 
markets, ORFs

[[Page 14143]]

and technical costs associated with routing options. The Exchange 
believes that the proposed non-Customer C2 Routing Fees will enable the 
Exchange to recover the costs it incurs to route orders to C2 in 
addition to the flat fee to recoup transaction costs.
    The Exchange believes that its proposal to amend the non-Customer 
C2 Routing Fees from actual transaction charges to a flat rate, in 
addition to its fixed cost, is equitable and not unfairly 
discriminatory because the Exchange would uniformly assess the same C2 
Routing Fees to all non-Customer market participants. Under its flat 
fee structure, taking all costs to the Exchange into account, the 
Exchange may operate at a slight gain or a slight loss for orders 
routed to and executed at C2. The Exchange believes that its proposed 
Routing Fees for routing non-Customer orders to C2 are reasonable 
because they are an approximation of the maximum fees the Exchange will 
be charged for such executions, including costs. As a general matter, 
the Exchange believes that the proposed fees will allow it to recoup 
and cover its costs of providing routing services to C2.
    The Exchange believes that its proposal to not pay a rebate to 
Customers and assess no Customer Routing Fee is reasonable, equitable 
and not unfairly discriminatory. The Exchange believes that the pricing 
structure is reasonable because, although not an approximation of the 
cost of routing to C2, Customer orders will still receive executions 
free of charge, whereas all other non-Customer routed orders routed to 
C2 would be assessed a Routing Fee. The Exchange believes that the 
proposed pricing for Customer orders is equitable and not unfairly 
discriminatory because it would apply uniformly to all Customer 
transactions. Participants desiring the rebate offered by C2 can route 
orders directly in order to take advantage of the rebate. Market 
participants may submit orders to the Exchange as ineligible for 
routing or ``DNR'' to avoid Routing Fees.
    Further, the Exchange believes that it is equitable and not 
unfairly discriminatory to assess a fixed cost of $0.05 per contract to 
route orders to NASDAQ OMX away markets (BX Options and NOM) because 
the cost, in terms of actual cash outlays, to the Exchange to route to 
those markets is lower. For example, costs related to routing to BX 
Options and NOM are lower as compared to other away markets because NOS 
is utilized by all three exchanges to route orders.\14\ NOS and the 
three NASDAQ OMX options markets have a common data center and staff 
that are responsible for the day-to-day operations of NOS. Because the 
three exchanges are in a common data center, Routing Fees are reduced 
because costly expenses related to, for example, telecommunication 
lines to obtain connectivity are avoided when routing orders in this 
instance. The costs related to connectivity to route orders to other 
NASDAQ OMX exchanges are de minimis. When routing orders to non-NASDAQ 
OMX exchanges, the Exchange incurs costly connectivity charges related 
to telecommunication lines and other related costs when routing orders. 
The Exchange believes it is reasonable, equitable and not unfairly 
discriminatory to pass along savings realized by leveraging NASDAQ 
OMX's infrastructure and scale to market participants when those orders 
are routed to BX Options and NOM. It is important to note with respect 
to routing to an away market that orders are routed based on price 
first.\15\ The Exchange will route orders to away markets where the 
Exchange's disseminated bid or offer is inferior to the national best 
bid (best offer) (``NBBO'') price.\16\
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    \14\ See Chapter VI, Section 11 of the NASDAQ and BX Options 
Rules and Phlx Rule 1080(m)(iii)(A).
    \15\ See BX Rules at Chapter XII (Options Order Protection and 
Locked and Crossed Market Rules).
    \16\ See BX Rules at Chapter VI, Section 11(e) (Order Routing).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange believes that the 
rule change would allow the Exchange to recoup its costs when routing 
orders designated as available for routing by the market participant to 
C2. Participants may choose to mark the order as ineligible for routing 
to avoid incurring these fees.\17\ Today, other options exchanges also 
assess similar fees to recoup costs incurred by the Exchange to route 
orders to away markets. The Exchange routes orders to away markets 
where the Exchange's disseminated bid or offer is inferior to the 
national best bid (best offer) (``NBBO'') price and based on price 
first.\18\
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    \17\ Id.
    \18\ See supra note 15.
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    The Exchange operates in a highly competitive market, comprised of 
eleven exchanges, in which market participants can easily and readily 
direct order flow to competing venues if they deem fee levels at a 
particular venue to be excessive. Accordingly, the fees that are 
assessed by the Exchange must remain competitive with fees charged by 
other venues and therefore must continue to be reasonable and equitably 
allocated to those Participants that opt to direct orders to the 
Exchange rather than competing venues.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\19\ At any time within 60 days of the 
filing of the proposed rule change, the Commission summarily may 
temporarily suspend such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.
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    \19\ 15 U.S.C. 78s(b)(3)(A)(ii).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number No. SR-BX-2013-017 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number No. SR-BX-2013-017. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will

[[Page 14144]]

post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent 
amendments, all written statements with respect to the proposed rule 
change that are filed with the Commission, and all written 
communications relating to the proposed rule change between the 
Commission and any person, other than those that may be withheld from 
the public in accordance with the provisions of 5 U.S.C. 552, will be 
available for Web site viewing and printing in the Commission's Public 
Reference Room, 100 F Street, NE., Washington, DC 20549, on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of BX. All comments received will be posted without 
change; the Commission does not edit personal identifying information 
from submissions. You should submit only information that you wish to 
make available publicly. All submissions should refer to File Number 
No. No. SR-BX-2013-017, and should be submitted on or before March 25, 
2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04857 Filed 3-1-13; 8:45 am]
BILLING CODE 8011-01-P